Triple S Farms LLC v. DeLaval Inc.

Background and Procedural History

This case involves a putative class action (a lawsuit brought on behalf of a group of similarly situated people) by several dairy farm plaintiffs against DeLaval Inc. and related entities, centered on the V300 milking machine. The opinion focuses on discovery disputes — specifically, DeLaval's repeated failure to produce documents related to arbitration clauses and class action waivers that DeLaval itself used to oppose plaintiffs' motion for class certification.

The court traces a multi-month timeline of non-compliance:

- In September 2025, the court denied plaintiffs' initial motion to compel production of documents related to arbitration and class action waivers (RFP 98) as premature, but signaled that if DeLaval raised these provisions to oppose class certification, the discovery would become appropriate. - DeLaval then did exactly that — opposing class certification in part by arguing that arbitration clauses and class action waivers barred some putative class members from participating. - Plaintiffs renewed their motion to compel. On January 15, 2026, the court granted it and ordered DeLaval to produce responsive documents by February 17, 2026. The order explicitly required DeLaval to "identify and collect" emails from any custodians who sent arbitration agreements — not merely to search previously collected files. - DeLaval missed the February 17 deadline, producing only a few documents three days late on February 20, and none responsive to a separate request (RFP 93) at all. DeLaval claimed it interpreted the order as requiring only a search of files, not full production, and searched only custodians previously agreed upon in 2023 — a position the court called "incredulous." - A second court order at an April 14, 2026 hearing required DeLaval to search additional file systems (including databases called DWS and CQT) and produce further documents by April 28, 2026. - DeLaval reported producing 590 documents by April 29, 2026, but plaintiffs identified continuing gaps: no new documents about the decision to implement the arbitration clause, and no updated privilege log (a list of documents withheld as privileged) for newly responsive materials. On May 15, 2026, DeLaval acknowledged it had not produced a new privilege log because it believed all privileged documents were already logged, but admitted it was "in the process of collecting additional documents."

Sanctions Analysis — Rule 37

Federal Rule of Civil Procedure 37 (Rule 37) authorizes courts to impose sanctions on parties that fail to obey discovery orders. Available sanctions range from adverse inference instructions (telling the jury to assume facts against the noncomplying party) and evidence preclusion, to dismissal or default judgment. Courts may also order payment of the opposing party's reasonable attorney's fees and costs. A lesser sanction such as attorney's fees does not require a finding of willfulness — mere noncompliance suffices unless the failure was "substantially justified."

The court found DeLaval's noncompliance was not substantially justified on either count:

1. Missed deadline and narrow custodian search: DeLaval had notice as early as September 2025 that it would likely need to produce these documents. The January 15, 2026 order clearly required production — not merely a search — by February 17, and required searching documents from any custodian who sent arbitration agreements, not just previously agreed-upon custodians. DeLaval's attempt to read ambiguity into the order was rejected as without merit.

2. Ongoing non-production: Even after the April 14, 2026 order, DeLaval failed to produce a new privilege log and may not have completed its document production. Three rounds of briefing, three hearings, and two court orders were required before DeLaval came close to complying.

Sanctions Imposed

Recommendation: Evidence Preclusion

Because this is a magistrate judge's ruling on what would be a dispositive sanction — precluding DeLaval from raising certain defenses — the court issued a recommendation to the district court judge (Judge Menendez) rather than a direct order. The magistrate judge recommended that DeLaval be precluded under Rule 37(b)(2)(A)(ii) from relying on arbitration clauses and class action waivers in its opposition to class certification. The court reasoned that DeLaval could not simultaneously invoke those provisions as a defense while refusing to provide court-ordered discovery about them. The court expressly declined to impose a more severe dispositive sanction such as default judgment.

Order: Attorney's Fees

The court directly ordered DeLaval to pay plaintiffs' reasonable attorney's fees and costs caused by DeLaval's violation of the January 15, 2026 discovery order, pursuant to Rule 37(b)(2)(C). Plaintiffs must submit a fee petition within seven days of the order; DeLaval may respond within seven days after that. The court indicated it will issue a supplemental order on the fee amount without further briefing or oral argument unless the parties are notified otherwise.

In Camera Review — Crime-Fraud Exception

Plaintiffs separately requested that the court conduct an in camera review (a private, judge-only examination of documents) of 56 documents DeLaval withheld as protected by the attorney-client privilege. Plaintiffs argued that the crime-fraud exception stripped those documents of protection. Under that exception, the attorney-client privilege does not apply to communications made for the purpose of furthering a crime or fraud. A party seeking in camera review must make a threshold showing — document by document — that a reasonable person could form a good-faith belief that the review might reveal evidence the exception applies.

Plaintiffs argued that: (1) DeLaval began implementing arbitration clauses and class action waivers shortly after a prior class action (the "Bishop litigation") settled for $55 million in spring 2022; (2) DeLaval tracked which V300 customers had signed the new agreements; and (3) after plaintiff Northcrest was added as a potential class representative in April 2025, DeLaval's vendor attempted to have Northcrest sign a revised agreement containing an arbitration clause.

The court denied the request for in camera review. It found that implementing arbitration clauses after litigation, tracking which customers signed them, and ordinary business record-keeping are not, standing alone, evidence of fraud. The court also noted that DeLaval's attempt to have Northcrest sign a revised agreement occurred years after the documents plaintiffs wanted reviewed were created, and that DeLaval promptly agreed the arbitration clause would not be enforceable as to Northcrest once it learned what had happened. Plaintiffs failed to make the required threshold showing for each document.

Disposition

Plaintiffs' motion (Dkt. 532) was granted in part and denied in part: - Granted as to attorney's fees and costs under Rule 37(b)(2)(C). - The court recommended to the district court that DeLaval be precluded from relying on arbitration clauses and class action waivers to oppose class certification. - Denied in all other respects, including the request for in camera review of the 56 withheld documents.